Even with sweeping utility reform legislation in place, regulators fight rising rate requests

Savings from a sweeping utilities reform bill this year are on the way, but energy regulators told state lawmakers Tuesday that they have seen rising rate requests from power companies this year, and expect to see more.

Those comments came during a briefing for the House Environment and Transportation on the implementation of the Utility RELIEF Act, signed into law this year as lawmakers continued to search for ways to rein in rising energy bills.

The law changes the way utilities project their rates, limits the amount of ratepayer money that can use used for executive salaries and focuses new scrutiny on transmission line proposals and other projects. It also cut the monthly surcharge on residents’ bills for the EmPOWER program, effective this summer, the fund that supports home energy-efficiency projects.

Still, state regulators said they have already cut steep energy rate increase requests by two major utility companies this summer, and that they expect to see more.

“Rates have to be just and reasonable – that’s a constitutional standard,” said Niki Wiggins, director of legislative affairs and policy adviser for the Maryland Public Service Commission.

“We always make sure we look carefully at everything the parties put forward so that we are only approving what is reasonable and necessary for the utility (company) to earn what they need to earn,” she said.

With much of the savings under the RELIEF Act expected to play out in 2027 and beyond, lawmakers in Tuesday’s virtual briefing acknowledged that there is still work to be done.

Maryland regulators slash Pepco rate increase request by more than half

“Each of these bills have value in addressing the overall energy challenges we face in the state,” said Del. Marc Korman (D-Montgomery), chair of the committee. “Of course we know our work is still not done. Rates are high and our constituents are feeling it. That’s not just limited in Maryland … but also regionally, in the country and actually globally”

In the meantime, regulators say they are pushing back where they can.

Last months, the Public Service Commission cut Pepco’s rate increase from more than $119 million to $50.9 million. It will still mean an increase of a little less than $4 a month for ratepayers in Montgomery and Prince George’s counties, but that compares to the original request that would have added about $10.24 a month.

Wiggins noted that the approved rate increase fell below the rate of inflation for the average residential user.

“So, hopefully not exacerbating an affordability issue for any of them,” she said.

The commission also reduced a Washington Gas rate increase, from a requested $82.5 million to $38 million.

The PSC is currently assessing a Baltimore Gas & Electric rate increase request of $156.1 million, and a Potomac Edison request for an additional $52.8 million.

Officials could not comment on those proposals, since review is still ongoing. But Wiggins reminded lawmakers that rate increases must be “fair and justified.”

Meanwhile, David Lapp with the Maryland Office of People’s Counsel said energy costs will likely continue to grow to accommodate the increased energy demands of data centers. And, he said, gas rates will also likely increase, as residents move away from gas appliances due to competition with electric and increased awareness of health and safety risks associated with gas use.

“More recently, capacity and energy costs have been significantly impacted by data centers,” Lapp said. “These fluctuating supply costs means it’s risky to adopt policies that require captive utility customers to take on long-term cost commitments for generations, especially at a time when costs are at a high point.

“We appreciate the substantial reduction that the PSC made in that request,” he said, referring to the Pepco case, “but we believe that that request was significantly inflated to start with.”